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Squawk on the Street

News/Business. Melissa Lee, Carl Quintanilla, David Faber. Opening bell market action. New.

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03:00:00

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San Francisco, CA, USA

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Virtual Ch. 58 (CNBC)

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mpeg2video

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ac3

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480

TOPIC FREQUENCY

China 24, Europe 22, Us 20, U.s. 16, Carl 12, Apple 12, Nokia 10, Vodafone 9, Pepsico 8, Verizon 8, Boston 8, John Donahoe 7, Google 7, S&p 7, Pepsi 7, Garth 6, Bjorn 6, Bny Mellon 6, Softbank 6, New York 6,
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  CNBC    Squawk on the Street    News/Business. Melissa Lee, Carl Quintanilla,  
   David Faber. Opening bell market action. New.  

    April 18, 2013
    9:00 - 12:00pm EDT  

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some ways. >> jeff is now an investor in my company, business insider so take everything i say with with a grain of salt. but before that, jeff has obviously built an incredible franchise in amazon. the reason he's been able to do that -- this is a lesson for most american companies -- take the long term view. ignore the wall street in the short term. >> that will do it for us today. join us tomorrow. right now it is time for "squawk on the street." good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber. after three days of triple digit moves on the dow, futures finally appear to be taking somewhat of a breather as we are knee-deep in earnings. lot of big names reporting today. jobless claims inching up a few moments ago. europe has had a pretty good bond auction, both in france and in spain. today, although italy's parliament still struggling to elect a president in their first
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vote. our road map begins with all that market volatility. we were up, then down, then up. we'll look at whether another triple digit move on the dow today could play out. apple dipped below $400 a share yesterday. closed above that. this morning verizon reporting strong activations for the iphone for the last quarter. will that help this stock that's been in free fall? pepsi beating expectations this morning. jim has an interview with the ceo. paypal under pressure this morning, facing increased competition from amazon and others. we'll break down numbers and talk exclusive to john donahoe, ebay's ceo coming up. futures on the rise after yesterday's drop of 138 points in the dow which is now posted three consecutive days of triple digit moves, including the big sell-off, 266 on monday an tuesday's rebound.
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just two weeks ago the s&p came within two points of 1,600. leads us to sort of a broad discussion of where we are in corporate earnings. i see two-thirds have beaten on the top line. less than half beating -- actually less than half beating on revenue. two-thirds beating on earnings. >> carl, the market is so short-term oriented, we had a couple bad ones yesterday. bank of america report, suddenly it's like, wow, it is a bad day. this morning we have pepsico, verizon, last night core labs, sandisk, union pacific, all great. now the world is well. it is whoever spoke last. it is almost as if it is a long season and last night some team won so therefore that team's prospects are great. and i just -- i don't like this because what happens is that people at home are thinking, it just makes no sense at all. but i will tell you that whoever spoke last is in charge.
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>> so earnings, they're not bad. they're okay. >> they're not bad. >> backdrop, commodities going down. global growth concerns. did you see those numbers of auto sales in europe? 10.2%. down 10.2%. and china slowing. i feel as though the market is trying to tell us something. isn't it? >> i think first of all, the marginal buyer of commodities has disappeared. i think the financial owners of commodities are bolting and that's copper, even oil. but you raise an interesting point. look at what you said about a company this morning with 90 million-plus customers. verizon. amazing numbers. all domestic. shows you what i'm hearing, whether it be ebay, whether it be pm, philip morris -- because they're international. we are the place ha is doing well. versus everybody else. >> we'll talk about verizon in a
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moment. not every company can be as domestic as verizon in terms of reven revenue. >> no. but housing is. the fact that domestic banks are doing a little better. pnc yesterday was pretty good. we got downgrades of price target cut on fedex. yesterday was something similar on caterpillar. yesterday -- >> fedex, same time i liked u.p.s. there's -- kind of fedex maybe spent too much money on asia. if you shen too much money on asia you're not in good shape. i will come back, i will see you daniher and raise you cyprus senate. i will see you fedex and raise you sandisk. union pacific versus csx. there is an excuse issue. union pacific with a remarkable -- coal only down
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six. if you're involved with coal, you just got coal in your stocking. >> all right. but that's a stock picker's market you're describing. that's actually trying to discern which managements are doing a better job. >> yes with, as opposed to the futures dictating everything. we'll get to pepsico but it was a remarkable quarter. what can i tell you. versus -- coca-cola had a remarkable quarter, too. obviously consumer products have done very well. pepsico is not claiming raw costs going down because they're hedged. many companies could. buffalo wild wings. we don't talk about buffalo wild wings enough. it is kind of like tractor supply and ulta. buffalo wild wings is seeing a dramatic drop in the price of chicken wings. if darden's seeing it, then -- i think mcdonald's is going to surprise. >> the chickens.
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>> require themefundamental of food chain is corn. >> in fact, a chicken nugget is largely -- corn. >> whiskey. something we talked -- >> let's talk a little apple. we haven't heard from the company yet. we get earnings next week. the one-day drop yesterday took it below $400 for the first time in two years. it did end above that. the company may find a silver lining in verizon's better than expected earnings report. dow component -- that is verizon -- saying it activated 4 million iphones in the first quarter. the numbers are staggering when you think about it. a loss of over $260 billion in market from the top. it took 14 months from go from 400 to 700. >> i think the seven-month
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anniversary of the all-time high is i think tomorrow. seven months. >> down 24%? >> yeah. it's staggering. but here he we are lining up for earnings next week. earnings are coming. we'll see how the fourth quarter was. nobody expected it could be particularly good. what are we getting in terms of any increase in the dividend or increase in share repurchase. nobody's expecting i think at this point that there's going to be some massive plan to return capital a la all the cash overseas. but that being said, i do know some guys who are at least short the puts. kind of take the shot here. >> limited up side, unlimited downside. >> that's true. >> people who are short the puts, i used to teach them how the options work. here's the deal. apple, people are down $41 for the year. maybe the number is $35. maybe that's what's going on. mac sales slowing this morning according to digitimes.
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no new products they're raving about. but if you're apple, say, we don't care. >> everybody's talking iphone activations at verizon. 4 million. that's 25% up year on year. verizon had had a higher mix of smartphones but does that sort of offset what they said yesterday? >> it always comes back to -- people want apple products. it's a great conundrum. verizon, it is a great statement that they want apple products. nokia's numbers last night were hideous. they have a lot of dumb phone. they don't have the smartphone penetration. this morning taiwan semi, a samsung derivative, saying unbelievable things. just the opposite of cirrus. they can't make them fast enough. they're even ordering capital equipment to be able to meet the demand. so it is -- htc/samsung, still a put. >> is the second half of the year story for apple at this point but perhaps the stock has
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already reflected a lot of what we expect or people expect to be not particularly good news for the first half of the year? >> look, tim cook last year was talking about a new product -- or something. a wow factor. i am still not getting a wow factor. but they have to have a skunkworks -- if they come out and say, listenen, we have, x -- i think it has to be turned by engineering. i know in the intel call, stacy smith has tablets are really taking over. i say i'm not hearing anything good about pcs. s sandisk would also indicate in their amazing quarter that tablets are good. but apple just doesn't make enough money on tablets. >> but they make enough on iphones. margins improve as they get manufacturing down and they ramp up. >> do you have any more intel on verizon, whether it is share take, which would be negative, or just new people coming in?
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>> i got plenty to share on verizon but that's not a question i can answer. >> that is for the quarter. >> 92.3 million customers? that's going to be video. we know that text has peaked. that must be video. >> all of those subsidies you give during the holidays obviously a thing of the past. >> there we look at the ebitda service margin. was trying to listen to the webcast but had to get on air. but they did mention fovodafone almost immediately in the q&a. that's nothing new. the news would be we're not
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interesting in buying the 49%. >> the marginal contribution of that must be terrific. >> but the question on verizon, it's 18 times this year's numbers. it's trading at a premium multiple to the market which it rarely has and the yield is not as great as it was given that move in the stock. do you really buy had company at 18 times-plus earnings? >> i can't get that kind of deal elsewhere. i know it doesn't have the growth of a -- let's say it doesn't have the growth of a pfizer. however, it does have a yield that makes it so that it's back. verizon is back. and it's a good back. >> competition may come monday from the likes of dish/t-mobile -- who knows. >> let's get to pepsi before we run out of time. up in the premarket, snack and
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beverage giant posted first-quarter earnings of 77 cents a share, beat forecasts as price increases helped boost margins during the quarter. case volume on beverages, down four in the u.s. coke was up one. are they losing share? does it matter? >> they are now talking about the idea, just forget about pepsi as a -- go with the mosaic which is pepsi, which is also tropicana, which is also gatorade. but really look at the international growth -- which was stupendous. china's really terrific. i'm looking at the raw costs -- stable, although they say they're going to be up. you have up side surprise built in. this was a remarkable quarter from the point of view of frito lay. people like good tasting food and also they like it good for you. the things they're doing in places like india, china are remarkable. my favorite drink in the world is on fire.
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>> which is? >> mountain dew. it is going to be the national drink of india in a couple of years. remember -- >> mountain dew. that's got a lot of caffeine in it. >> the dew resonates -- >> it explains your energy level a lot of mornings. >> they know that i like the dew and i do have -- besides the dew, quaker is another brand that's resonating overseas. this is the story of overseas. by the way, they like twitter, facebook. they're using twitter to get people to vote on what taste they like. david, i know from the general mills article, from that article in the "new york times," if you could find out what they taste, what they like in taste, you can flood the zone. pepsico's flooding the zone. stacy's, also very good numbers. frito lay we may think of as being nothing good for you. there are things in the aisle that are pepsico that aren't so bad.
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>> aren't so bad. well that's a ringing endorsement. >> they make naked -- they make the naked fruit smoothie drinks. i think that's their brand, too. those are pretty good for you. lot of sugar but -- >> no one ever said dorito's weren't good for you but, boy, do they taste good. >> it is okay to make a product that tastes good. not everything has to taste bad. international paper when they reported, you going to like shirt cardboard? >> everything covered in dorito's. all my steak with dorito's covering it. all right. also this morning, a blast at a texas fertilizer plant late yesterday killed as many as 15 people. more than 160 people are injured. toxic fumes have forced the evacuation of half of the community. the explosion could be heard up to 45 miles away and it leveled buildings for blocks in all directions. >> i don't know enough about that one yet. >> unbelievable story. a seismic event.
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usgs put it at 2.1. >> did they really. >> you think about blast being felt 90 miles away. that's the distance between new york and philadelphia. it is almost hard to comprehend. >> people -- remember, fertilizer was used in bombs. i'm not saying terror. i'm just saying this is a volatile substance that the atf -- people keep track of. >> they are getting some rain in dallas this morning. hopefully that will help douse the fire. but it is a horrible situation in texas. a big day for ipos today. three companies are going public. find out how they'll open for trading. a live interview with the head of ebay, john donahoe. stock's up 55% in 12 months. but down on some of their guidance which some say didn't match with all of the hoopla regarding analyst calls in the recent past. in the meantime, futures up almost 20. lot more "squawk on the street" live from post 9 at the nyse when we return.
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welcome back. i have breaking news. i just got off the phone with the ceo of morgan stanley. earnings and revenue coming in slightly above expectations. porat telling cnbc the first quarter is a solid start to the year. speaking of when the fed will basically sign off on the approval process of the rest of the acquisition of its joint venture with citi, she says
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timing of that is still unsure though the company has submitted the paperwork needed for are that approval process. as far as the brokerage arm which perform very well hitting a pre-tax profit margin of 17. %, she said she would revisit those goals for the pretax profit margins for that unit in mid year once, again, the final acquisition or the last leg of that brokerage unit has been completed. the year over year decline in fixed income commodities and currency trading was down 42%. she said it was due to the very strong first quarter of 2012. that was due to some hejs that had helped put on for its clients. however, she did note on a quarter over quarter basis trading was up. retail activity among the brokerage clients was strong in january and february. it did taper off a little bit in march on concerns about some of the issues we saw. cyprus the big run-up in the market, et cetera. april got off to a slightly stronger start as well. she said ceo confidence when it
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comes to m and a, she said right now ceos are looking out to the second half of the year. there is concerns about the profit outlook there and that's holding them back a little bit. debt and equity underwriting remain strong. >> thank you, mary. a lot of information you had from that conversation. we're going to have a lot of tech earnings after the bell tonight. google, ibm, microsoft all due after the bell. ebay shares falling in the premarket after releasing first quarter results. revenue growth did slow in the period dragged down by performance of its paypal unit. ebay also lowering guidance for the current quarter. we are going to have a live interview with ebay's ceo john donahoe in the next hour of "squawk on the street." some are saying they tend to get a little shy in the near term guidance. maybe that's why this wasn't a blow-out. >> bob swan, cfo, says in the report, europe was a little bit slower. as soon as you hear "little bit slower," just like when
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americans use the expression "sluggish," these are code. analysts immediately say get me out, short the stock. it is not as easy as that but that's what happens if you say something is a little bit slower. people interpret that as meek, david, it is the end of the world. but it really doesn't seem to be the end of the world for this company. >> no, i would say that is a fair point. >> numbers re-affirm guidance. >> they did. the company's been transformed. 68% of what sells on the side is now fixed price. obviously paypal we talk a great deal about but it is also an expectations game. >> there was some dwelling on vodafone on the verizon call. they've reiterated again and again an again they're interested in buying 45% of verizon they don't own -- that's
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vodafone. vodafone shares are up. they're up because of what they're saying on the call. we'll come back to it as we have, so many times. >> it would be an enormous deal. and it is the time to do it if you can borrow at these rates. >> verizon's growth rate would -- well, you'll say jim, how come you didn't tell people to buy it? sit in the front seat of this roller coaster with jim. we're back in a minute.
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five minutes before the opening bell. time for cramer's "mad dash" ahead of the market open. >> core labs will be the biggest winner today, i believe, clb. this is a company that maps reservoirs. it shows you where there is oil and gas. offshore drilling spike. not being diminished by the decline in west texas. >> what about fracking? why do we need to go offshore when we have so much here? >> isn't that interesting. that's what i thought. did he say there are maybe one or two find to be announced in this country that are big but
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they won't say where. i got to find out. this is the greatest puzzle i know right now. there is prudho bay in this country. meantime, mediterranean, big natural gas deal off cyprus. it is the gulf of mexico that's come alive with pleasure. all right. that's "the mad dash." it is an ipo extravaganza on wall street. three companies -- can you imagine that? going public all at the same time. we'll bring you the first trades. opening bell coming up. all stations come over to mission a for a final go.
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[ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade. you're watching cnbc "squawk on the street" live from the financial capital of the world. opening bell set to ring in about 40 seconds or so. some of the repair work that's trying to be done on apple. nokia will be a big loser today. shipments of mobile phones down 21%. >> nokia is just -- we've seen
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these things happening. companies disappear. companies disappear. there's no reason for nokia right now to exist other than -- they have to re-invent themselves. microsoft. i don't know. goldman says downside surprise. >> there is the bell, by the way. little better than we saw yesterday. we have three ipos at the nyse today. over at nasdaq, the maersk group. the ceo will join us. >> i've got to tell you, there are companies that give you a better tell for world why commerce than any. this maersk may be.
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europe to china, china to the united states, they know everything. >> from sea on the containers on the ship that goes on to a truck and goes somewhere inland. >> and kids, parents, if you ever go to one of their docks, it is so exciting. >> why? >> because they have giant cranes come down from the sky an bring big -- >> i just wonder why. >> it's exciting! i used to go to airports all the time and watch planes take off. >> or land. >> with my kids. they're easier things than going to disney world. >> you mentioned verizon. it is one of the big gainers this morning. that's going to be a pop of almost 3%. unp which you mentioned -- >> oh, boy. look, they're in the right spot. they're in the west. the rails are a great slap happy company these days.
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meanwhile, verizon trades like a biotech stock. >> it trades really well. the key question there is can they sustain those margins, those margins were amazing. above 50%. we should point out again just not to dwell on it but the whole vodafone part of the story with vodafone shares up 3.79%. when verizon said on the call we believe that vodafone can sell its stake tax efficiently, they were focusing in on an issue that's at least been -- is of some consequence, the idea that vodafone would suffer a large hit if they tried to exit that big stake with verizon. it may have been reported vodafone has signed on to more or less the idea that there is a fairly good way to structure it to avoid a huge tax hit but it doesn't mean that they're connelling to the table and willing to do it. vodafone has to figure out what they want to do when they sell that enormously valuable
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stake -- $95 billion. >> at the same time, people will say why isn't it up? united health sequester. they mentioned point-plank that the sequester hurt them. the stock is getting crushed. remember sequester? well there it is. >> humana's feeling some pain and sympathy, too. >> the unitedhealth is a little sobering and a reminder that the government is a net drag on this u.s. economy. check out auto nation. there is no better gainer on the s&p. stock that's already up 17% this year. >> it's remarkable. >> we all know what pent-up demand is for cars. we all know the mileage that's on the average trade-in. >> i like mike jackson. when you contrast europe with the united states, think of auto nation. okay? they can't move a car in europe. they can't move one across the street. >> you're absolutely right.
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talk about a dichotomy. >> we are not one world. used cars going up, too? the country you can get, wells fargo largest auto loan company. you can get money for a car. it is tougher to get money. richard smith, i have this guy from realogy. a large real estate company. they're holding their value much more than you thought in the united states. >> morgan stanley is down 3%. talked about m and a, lack of activity saying it just reflects the ceo's lack of confidence with regards to earnings power. >> which is what you hear. those who are doing deals, it is interesting, are the likes of -- or at least proposing one -- john malone, guys who are in control, who see the advantages of cheap money and who are willing to take risk but if
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you're a ceo of a company with not that much on the line except your job, are you really going to take the risk when you have maybe a seven-year, ten-year ahead of you, maybe even less, that's shrinking. you know some shareholders are going to start yelling and screaming and you know there will be some regulatory concerns. probably surmountable but nonetheless there. it just raises the bar. when they do deals a la thermo -- >> but it is just not working. that group is so in the doghouse. >> so it is harder. but that doesn't mean there isn't going to be m and a. it just means the euphoria created with the likes of heinz and virgin media overseas and dell -- >> it's over. >> it's not over! >> march was bad. march was a bad month. >> it was. but for morgan stanley, m and a, global management is an extremely large part of that
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company. they'll close soon on the 35% of smith barney. that's an important component. you want to keep an eye on tangible book, how much it is going up. >> book as 31. 6 i have to go back to the s and l crisis period. >> i still know guys that look at two things, roe and book value to decide it's working or it's not. >> nice gain for fairway yesterday. unh is shaving 30 points off of the dow all by itself. >> wow. that's a shave and a haircut. >> then ebay, we'll talk to
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donahoe in the 10:00 a.m. -- >> they shouldn't have used words like "tad softer." whatever. their numbers weren't as good as i expected either. but remember, ebay also had a similar situation back in october, then it reversed. it is still a powerhouse but i await your interview to find out more. in the same way that people should avoid sandisk before they sold it to $51 last night and now it is at $56. >> bob pisani is on the floor watching things this thursday. >> i wonder what happened to the hot ipo market. lot of them have been coming recently but suddenly today, maybe it is just the companies, but three of them priced below expectations. we're waiting for intel's side. it is right behind me. 19.3 million shares at $18? the price talk was 21 million shares. not 19 million. we were talking 21 to 25. it is pricing at $18. right now it is looking somewhere around $17. we have another one out specially finance company, that's around the corner.
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13.3 million at $12.50? that's below the price talk of $14 to $16 as well. that's also going to maybe open a little bit lower. then an organic chemical maker, 15.8 million shares at $15. price talk was $18 to $20. that one's looking $14.75 to $15. maybe it is the crummy stock ek or just a little less interest in these companies. intel and taminco. seaworld? did you see what happened? they increased the size of the offering overnight. now it is 26 million shares. it was 20 million shares. they're going to be down on the floor and they're bringing the penguins. the they're pricing tonight. they'll be here with the penguins.
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that will be tomorrow here. i want to know what's going on with the ipo market. david ethridge is here in the next hour, the head of ipos for the new york stock exchange. we'll get some answers on whether this is a hot market or whether it is starting to cool off and maybe along with the rest of the stock market. we're talking about multi-industry companies earlier. i love these companies. they make all the stuff behind the walls that nobody pays attention to. heating, ventilation, air conditioning, pumps, bolts that go behind them. it's been a mixed bag so today, danaher came in disappointing. but other ones out there have been okay. dover came out. granger on tuesday. they did all right. freeport, basically this is a copper company. two things -- higher costs, lower copper prices. sherwin williams did pretty well
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on top of that. $16 to $17.50 for intel. i'll be here when it opens. >> don't forget, seaworld has a very good yield. we know from verizon people are starved for yield. let's check out the latest news in energy metals. sharon epperson at the nymex. . roller coaster market that's putting it lightly. we are looking at oil prices that are rallying today. brent is up after six straight sessions of being lower. still firmly below $100 a barrel even as we're learning that saudi arabia's exported surged in the month of february. we're continuing to watch wti prices as well that have rebounded a bit here. we are looking at what some traders are calling consolidation here before we see the next leg in whatever direction we're seeing. because of course, there's been so much volatility in the oil market. across the board in the energy complex we are looking at prices that are higher. natural gas of course, we'll still wait an see the reaction
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there to the storage data that we get at 10:30 a.m. eastern time. this is expected to be the first injection of the season. that could continue to put pressure on natural gas prices that have been very resilient throughout what we've seen in the beginning of the week with the commodity decline that we saw across the board. also watching gold prices. gold prices have stabilized a bit as well. of course we have been telling you about the gold coin sales that have really been robust. record levels in fact for the month of april and according to the u.s. minute. we'll continue to see where gold prices are and that 1,400 level remains key. back to you. >> thank you very much, sharon epperson. did want to share some news here on sprint and its potential conversations that may soon take place with dish, the company that made an unsolicited offer to acquire it -- or at least a proposal to do so. i can tell you at this point that sprint's board has decided to form a special committee to
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negotiate with dish and to negotiate with softbank. there was some question as to whether there was a need for a commission committee to actually be formed by the sprint board but they've chosen to do so. sources tell me it will be led by sprint's current chairman, james hanson. he was the cfo of bank of america for some time. he's been the chairman of sprint. he will run the smepecial committee. they are taking quite seriously the bid from dish, at least in trying to determine whether it has any chance of leading to a significant -- or i should say a bid that is higher or has the chance of leading to a bid that is higher than that from softbank. i cannot tell you how many people i've spoken to for the last three days since this first came to the fore who question whether the man who runs dish is for real. questioning whether and why he didn't already sign up banks in terms of at least paying for his financing. there's a look at that proposal.
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questioning the leverage that he will be taking on. perhaps as close to five times ebitda, how to continue paying the buildout of network vision. the question is whether he just wants to try a get to commercial agreement with sprint and aor softbank. yet here we are, he we are. sprint's board will form a special committee to deal with that tish bid and to deal with softbank as well for what could be a fairly complex process. softbank for its part will likely want to push its timing advantage. it wants to close this deal perhaps as soon as july 1st. it would love to push that timing advantage over what would be a much longer period for any dish deal and raise all those questions that have been raised by so many since mr. ergen first decided to make ha bid overall for all of sprint. did want to share that this morning.
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>> hanson is a hitter. you think of bank of america these days, you think of it as a giant. but hance has been around a while. sprint seems to be trying to do what's best for shareholders. >> well, that is correct. the special committee -- some thought says softbank already bought 16% of the company or something like that. when they purchased that convert, even though it converted at the time they closed. so they are now an affiliated party so you need a special committee. but i think it is more just to be as pristine and transparent as they can be. >> this is dan hasse's trademark. that's the ceo's trademark. i've never seen a more shareholder friendly ceo. >> by the way, if you are a law firm or investment bank out there, apparently you still have a chance to sign up with that special committee and advise
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them. unclear who they've hired at this point. doesn't appear they've decided fully yet. so fees. fees. go ahead. hit the phones. >> got to watch pepsi which is just breaking out here in this market. it's taking the leadership role today, 5% gain. >> it's remarkable! growth is accelerating. developing markets bust 12%. latin america's on fire. guidance was terrific. they raised the dividend rather substantially. this was a domestic company -- largely domestic company before indra newy took over. pisani mentioned some of the ipos. hasi, the price talk was between $14 and $16, priced at $12.50.
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now $11.55. >> that's a little disappointing. >> full name is hannon armstrong infrastructure capital. >> you hear the word financial and people just don't want to buy anything financial. doghouse. speaking of which, apple also back -- >> how is apple doing? >> there it is. $400. >> if you say anything bad about apple now, @jimcramer on twitter. it's all my fault. i've blocked all the financial engineering and i've also refused to create a new product. keep an eye on apple and all the ipo action here at the board. a lot more opening trades are on tap. it is all about tech tonight. we'll talk to ebay and microsoft an others after the bell. [ male announcer ] here at optionsxpress, our clients really seem
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we've brought you you up to speed on hannon armstrong. meantime we are still waiting on a listing at the nyse. intel sat which helps actually us do what we do. >> not a big fan of that one. the ones that i'm fans of are the ones that just have great brand name, that people know. those are kind of working and home. anything home has been fabulous. >> how long does that keep going? we were talking about consumer staples. you watch pepsi. but how long do the multiples move up here in consumer staples and the like? >> pepsico will actually give you some revenue growth. you have stocks like ppg that are on fire. they deliver terrific numbers. that is upside surprise. upside surprise and higher multiple is kind of a -- you could say that's still somewhat rigorous.
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>> plus, that 4% yield on verizon will get your attention. >> ppg's up 9. this market is so crazed. >> pepsi. >> there's companies that are doing fabulously because of their management. chuck bunch at ppg, a remarkable manager. >> management matters. >> it does. it can make all the difference. >> i'll give you my 30-second manager right over your head if you're not careful. >> how much are you worried about microsoft tonight knowing what we know about pcs and what they did in the last quarter? i mean would you even step in front of that? >> union pacific has a train and that's worth stepping in front of. >> you'd rather step in front of that train. >> i cannot believe the dichotomy. expectations are -- there was a really good piece in the "new york times" about the surface
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product. i do find that microsoft is an inexpensive stock. so if it goes down it goes down a dollar. it doesn't have a feeling of running you over. it just doesn't. up a dollar, down a dollar. >> interesting. yesterday the big warning was tech strong. >> assessment numbers were terrible. when we come back, mgm resorts name and ceo, jim murren. how the casino operator is upping the ante on the vegas strip. coming up, we follow the beat of the drums and the one beating them is jim cramer playing the song "six stocks in 60 seconds." "squawk on the street" will be right back. i know what you're thinking...
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stocks in 60 seconds give or take a few. >> one of the big themes going on here is china is just being collapsing the solar business. >> big break-through in antidepressant. >> underpromise, overdeliver. this drug may work for people who can't take prozac.
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>> you called apache horrendous. >> i'm worried about the 20% of the business that's egypt. >> jeffries says best buy numbers may be too low? >> stock's going higher. >> you call unp remarkable. >> you want to contrast that with csx? michael ward is a great railroad man but union pacific is in the right place. >> holly frontier. >> i don't care for refiners as much as drillers. >> we already know indra nooyi on "mad money" tonight. >> technology companies come in all shapes and sizes. rich kinder is the game changer. talking about one of the largest
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pipelines in the country. >> that's quite a trio. >> thank you. i worked hard for that. >> we do have taminco and intelsat open. none of them are setting the world on fire. neither is this bounceback we thought we would get at the open. >> no. it is frankly -- no. not good at all. the s&p's turning. apple's now $399. take it for what it is. financials, bank of america down another 2.5% after a 5% loss yesterday. yeah, i'd say it's not doing too good. >> little disappointing pepsico doesn't have legs, union pacific doesn't have legs. ppg doesn't have legs. >> jim, we'll see you tonight. >> thank you, guys.
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>> 6:00 and 11:00. philly fed after the break. ♪
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welcome back to "squawk on the street." the philly fed number comes out at 1.3. it expected 3.0.
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this is quite disappointing from that point of view. we look at the s&p futures. they've sole off a little bit on that news from down 4.5 to down 6. we look at leading economic indicators. a surprise also -- minus .1%. expecting a 0.1%. the interesting thing about the leading economic indicators, they've been helped the last couple of months by an expansion of housing permits. one thing we learned from the housing numbers that we just saw over the last couple of weeks, housing numbers have been disappointing, too, so i believe that that's going to be a big cause for these leading economic indicators to also be disappointing. i think many people were expecting around 0.1% to 0% line. so a negative number doesn't bode well for numbers that just came out today. >> great point about permits which were not a pretty picture yesterday, j.j. thank you so much walking us through some of the data today. we'll get a quick update on the markets on the double dose of data. dow was down 138 yesterday.
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nasdaq as usual with relative underperformance, down .75%. we'll start again with the markets and all the volatility on street. what a week it's been and we're not done yet. where can you go to seek some shelter as earnings kick into high gear. le we'll talk to barclays barry knapp live. we're reading through the verizon tea leaves ahead. last, but not least, an exclusive interview with ebay ceo john donahoe. the stock under a little bit of pressure today. let's get back to the markets and all the volatility we've experienced this week. bar barry, welcome to the program.
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do you smell opportunity in the air here? >> well, i think we may start to smell it a little bit, perhaps in a month or so. what we think is developing is the realization that growth has not accelerated in china for all the optimism in late 2012. china's not growing all that robustly. and for all those that thought that the u.s. was finally going to achieve escape velocity, that this was going to be the year, we're nowhere close to that right now. we're still growing less than 2. those two dynamics have started to put serious pressure on the capital spending parts of the equity market. so anything to do with china over the last month or so is down 5% to 10% from an industry group perspective and you're starting to see that permeate in the u.s. sensitive sectors, too, like autos, consumer durables, home builders. there is a real rationalization
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of this growth going on in the equity market right now. >> that's great analysis on the first bounce of the ball. question is where does it bounce to next? there is a note out today from oppenheimer that says maybe you should move back into tech and out of some of those defensive consumer areas. >> we're not there. we've been advocating what we've been calling stocks with bond-like characteristics for better part of two years and we really pressed that at the beginning of this year. we are not ready to make that change. if through earnings season and as we get into the full april data set you really were to see a significant correction, probably in the overall market but certainly in those capital spend sensitive sectors, then you might get a window to do it. but we would not be doing that today. >> obviously, barry, then the alternative might be to continue to buy some of these defensive names and we see them at the top of the list today. the verizons and pepsis.
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don't you run into a valuation question there? how expensive do they get when even they are not a good alternative? >> we don't think valuation matters a whole lot for those stocks. we think it is more about the huge tentacle created by fed buying and now bank of japan. some of that buying weakened into the u.s. this is the same thing that happened in the '40s and '50s. but i am sympathetic that if you rationalize that growth outlook to the point those defensive sectors -- or cyclical sectors get much cheaper it might make sense to do that. you sort of frame the question in an interesting way, carl. if you had new money to put to work today, what would you do? we would not be selling the defensive names but i'm not sure i'd put a heck of a lot more money into them today either. i'd probably hold my money in cash right now and look for an opportunity over the next month. >> really. you'd put money in cash. barclays barry knapp would put it in cash and watch it slowly
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burn a hole in his pocket? >> if somebody gave me new money today and said what do you do with it? if i was forced to put it into the market i'd have to continue to buy those defensive sectors. my preference would be to hold back and look for a window over the next month or so to put money into the market overall, and then if the cyclical sectors got beat down enough, then put things to work then. this is a round-about way of saying we think we're due for a decent correction. >> how big a correction, barry? >> i don't think it is going to be anything near the order of magnitude as it was in 2010 or 2011. and even 2012 when the ed ended up extending operation twist we went down 10? we think it might not even be that bad. something along the 6% to 8% range. the fed is not going to be tapering purchases any time soon and we couldn't think we're going to get a public policy flare-up like we had in '10 or '11 during the debt ceiling
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debate or what happened during the whole election process which so influenced business confidence a year ago. so those two factors are better than they were each of the last three years. the growth piece is similar. on balance we think that adds up to something less than those prior three-year corrections. but close to at least last year's. >> there are some interesting calls in that analysis. barry, thank you very much for your time. barry knapp there at barclays. switching gears a bit from the broader markets to technology, specifically apple and its slide back below $400 today. does the news out of verizon offset all the bad news we got from supplier cirrus yesterday. dan niles, is the cio of alpha one capital, he's been negative on apple shares for six to nine months or so. joins us on the news line today. dan, welcome back. >> thanks, carl. nice to be on. >> does any of the activations of the iphone out of verizon negate or offset what spooked us from cirrus yesterday? >> not at all.
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verizon is one carrier out of many. if nothing else, what the negative out of the verizon is that -- all the carriers are trying to discourage upgrades because that's expensive for them. they actually did a really good job on that which is why you saw some upside to the numbers for them on margin side. so if anything it increases some of the concerns i have for apple because, remember, apple's really at the high end of the market which is the big problem that they're having. so if you look at this release and you go people aren't upgrading phones because phone carriers are trying to make it more difficult, that's not really a good sign when you don't have an offering at the mid range and low end of the market. >> are we at a point now with this three handle where the market has essentially written off the march quarter, where a miss on revenues, a fourth consecutive miss would not be a big deal? >> well, look at nokia. right? they had -- they've been missing forever and the stock is still
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down 12%. i think the problem is that a lot of people may confuse a stock that's down a lot with a stock that's cheap. those are two very different things. because if a company is having problems with their underlying business, trying to guess that a stock is cheap -- how many times have people tried that on dell or nokia or rimm or a lot of these tech companies that used to be bellwethers that are having a lot more problems. the only thing you know for certain right now is that apple is not producing products for the entire market space and samsung is absolutely killing them. they're not producing phones at the mid range to low end of the market really. and they're not producing -- they're not carriers either. those are the issues they're not solving. >> but the point is, gene munster made this point on "squawk box" earlier on -- valuations may be out of the window. the question is what is the product release schedule and can
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you get excited about that. that of course is what the bulls will latch on to. there may be a lower price phone and we could have a discussion about margins, but are you not excited about the possibility of what apple may do this summer and next summer? >> well, here's the problem if you're a bull. you're implicitly ignoring what tim cook told you on the last conference call. because somebody asked him about, well, what do you think about the screen size because samsung's got a bigger screen on their phones. and the answer was, so we've put a lot of thinking into screen size and believe we picked the right one. so you're not going to get a bigger phone. in terms of producing a lower end phone, that question was asked as well and sort of the answer was, the most important thing to apple is to make the best products in the world we want to only make the best products. and so the implicit answer was, no, we think being at the high end of the market is fine. by the way, that was a great strategy when apple had products that nobody else had. the problem right now is that you've had a lot of other
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vendors catching up. so, yeah, they do have products coming but if you just get another phone that has just got more power to it and there's no different form factors, that's going to be an issue. now apple tv? i think they will come out with a tv product because that is something that tim cook said. they've got an intense interest in that area. but i think that's probably coming in the summer period at some point. i think we're going to have to wait a while for a low-end phone. so i look at all of that and in the near term, the biggest excitement quite honestly is hopefully they move the dividend up when they report the quarter. better cash return. but that's kind of what i'm looking for. if they don't do that, the stock could go quite a bit lower and there is some talk that maybe they don't do the dividend when they report the quarter. >> we'll see. or repurchase. when you say "quite a bit lower," dan, what's low enough? here you compare it to rimm and nokia is a little shocking. but ere's low enough given the
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prospects you're outlining? >> well, but here's the thing. right? why are you guessing as to what's low enough? until the fundamentals stop getting worse -- don't forget, this company's missed three quarters in a row. the stock may have gone up because people were willing to ignore it for a while. well, because it is apple and obviously apple's going to $1,000 a share. you remember how many people were on cnbc making that call. the issue is, my fundamental rule with investing in technology stocks -- because unlike a lot of other industries, you have the market share leaders of yesteryear sometimes falling on bad times. we remember motorola way back with the razor. >> not a lot of occurring revenues in this business. >> that's what i mean. until you see products and demand improving, don't try to guess where the bottom is. that's just a recipe to get yourself into trouble. >> yeah. some people are definitely in that, dan. thank you. we'll talk to you soon. >> all right. take care. >> dan miles from alpha one on apple. up next, we'll check in at
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the vegas strip with mgm resorts chairman and ceo, jim murren. he has plans to spruce up the casino in sin city. what about the threats facing the area in the wake of boston. plus a live and exclusive interview with ebay's ceo, john donahoe. what he's seeing over in europe and consumer right here in the u.s. stay tuned.
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want to bring you an update on a bigger to this morning, it is the blast at that texas fertilizer plant last night killing as many as 15 people. more than 160 people are injured. toxic fumes have forced evacuation of half of the town. explosion could be heard up to 45 miles away and it leveled buildings for blocks in all directions. the governor will hold a news conference with some updates later on today. we want to head to josh lipton at headquarters looking at how some of these fertilizer stocks are reacting. from it is interesting to note some fertilizer stocks this morning, the moves they're making. talking about names like cf
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industries, potash. citi is telling their clients saying ammonia is "coming back from the dead," that's after several plants were closed after the past five to ten years following elevated natural gas prices from 2005, 2008. analysts saying the north american ammonia industry is poised to significantly increase capacity over the next ten years. >> thanks, josh. tough story to report on out of texas. a new study shows that china is quickly losing its luster as the base for manufacturers looking for a cheaper location to build things. does that mean that u.s. companies will start thinking about moving operations back home? phil lebeau is in shanghai today with a lot more on that. morning, phil. >> reporter: hey, carl, this is one of the more interesting toerz in shanghai when you look at the rising cost of manufacturing in china. take a look at this chart. this is a new study out from alex partners today. when you look at this chart, it is important to note that
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towards the very right, that's by 2015 when alex partners believes that the cost of manufacturing in china will be roughly on par with what it would be in the united states. we visited one u.s. manufacturer here in shanghai, prints industries out of illinois has a plant here in shanghai. they say that their wages have increased an average of 12% annually. they ship 25% of what they make here. they make parts for companies like caterpillar and honeywell. they ship about 25% to the u.s. and that's becoming a less cost effective option. >> right now labor over here is cheap. but labor cost, quality and that kind of tough add on it is making the states probably more cost effective. >> reporter: why are costs rising here in china? look at the hourly wage inflation here in china.
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you might say, well, sure, it is china, they're only, on average, paying people $3 an hour compared to $27 in the united states. but those who have done the studies and have crunched numbers say that at the end of the day, china still is an attractive option, though its cost effectiveness is starting to wane. >> there aren't that many places in the world that you can go to to say, i need 10,000 people on the floor in a factory in three weeks and have it happen. so with that latent capacity and with their capabilities they've built up, even though they're losing some of their cost competitiveness, that's still where the huge portion of the global capacity and capability is. >> reporter: one last thing to look at here, the appreciation of the rnb, the chinese currency. it is up about 25% over the last eight to ten years.
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david, people look at that currency inflation, they look at what's happening with the wage inflation and they say, you know what? china is still an effective place to manufacture especially for here in china, but in terms of exporting back to the u.s., those days are quickly starting to come to an end. guys, back to you. >> with significant ramifications. phil lebeau, reporting from shanghai, thank you. from china to sin city, mgm resorts this morning unveiling new plans to spruce up the vegas strip. joining us now, mgm resorts international ceo, jim murren. i want to hear about vegas, but phil was just in china. you guys do a lot of business there in macao. it's become a concern in our markets in terms of growth. what are you guys seeing in china? are you continuing to see growth or are things starting to slow in. >> well, we're going to report earnings in a couple weeks so with that in mind, i could just say that we're having a very, very solid year in china in our
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mgm mccow propermacao property significant growth in our cash flow this year. we had a very strong chinese new year in macao and i'd expect continue growth, even understanding some of the macro trend that you're talking about. more people are going to macao than ever before. >> this morning you unveiled details about an experience you're creating in vegas surrounding a new 20,000-seat arena that's under development in conjunction with aeg. why are you doing this? >> well, we turn away literally dozens of concerts, entertainment. events every year here in las vegas. we literally cannot accommodate the demand. we own two arenas already, one at mgm and one at mannmandolay. we will be able to bring more
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events to las vegas and more people. that of course will help the home team and we have most of the resorts here. >> you are more exposed to vegas than your bigger competitors or the other big competitors. 60% of revenue and profits. what's the recovery like now? because the convention business, the groups business has been slow. what can you tell us generally about the industry, notwithstanding the fact that you report in a couple of weeks? >> yes. it was painful having so much of our profits here in las vegas during the recession. we were battered by the recession. but las vegas is firmly rebounding now and we are leading the way. i would expect that las vegas as a hospitality market will outperform the other u.s. gaming markets over the next couple years. we're seeing more people coming to las vegas. we'll probably have a record in terms of tourism this year. they're spending more money, thankfully. occupancy rates are moving up. gaming volumes are rising and the cream is rising to the top.
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so our largers competitors, caesar's, venetian, and ourselves are getting a lion's share of the market and i expect that continue is going to continue. >> the issue moving forward is the amount of money that everybody is investing given that you're so heavily exposed in vegas. we have denting and sls. they're also going to develop new casino resorts. will the demand be able to absorb the supply? susquehanna ran some figures as to what it could mean to you moving forward, that excess supply. they say it could cost you $1.60 a share in equity value. that's 11% downside to their price target of $15. what would you say to that analysis? >> well, as an ex-analyst i'd have to say that's flawed. and the answer is that the billions of dollars that have already been invested here in las vegas by ourselves an our competitors, that's the
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foundation of growth here. you won't see a lot of new capacity. the two properties you've mentioned is just a very small number of rooms relative to the room base that's already here. we're not going to build a new resort. neither will winn. neither will venetian. neither will caesar's. you won't see large supply growth like you did in the '80s, '90s and earlier part of this century. so i think that the capital investments we're making -- for example, opening up exirsing resorts like new york new york and monte carlo, building a park that's very similar to great city parks. that will bring more people here and the return on investment -- jim, want to interrupt briefly. the president has just arrived at boston's logan airport. there he is with the first lady exiting air force one. he is on his way to the cathedral of the holy cross at the south end for an interfaith service. a memorial service for the victims of the boston marathon bombing. that's going to start at 11:00
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a.m. eastern time in about 35 minutes from now. mayor menino, governor patrick, even mitt romney will be there and the president will speak. when that starts to happen at 11:00, we'll bring you that live. huge week for ipos with the likes of fairway, intelesat. with the flood of companies coming to market, is that a sign of good things to come? we'll get back in a couple of minutes. my mantra?
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three more ipos today here at the new york stock exchange. let's bring in bob pisani. we've had a lot of initial offerings recently. >> david ethridge runts whole ipo business at the new york stock exchange. we've had an up trend in the stock market at least until monday. is the ipo business in an up trend? >> i'd say the ipo business is in really good shape. good funds flows coming into the market to start the year and pricings have gone extremely well. we had a little indigestion last
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night but ipos have been around 8%, 9% so the asset class looks good. >> we had three ipos that opened below expectations. just a lousy market this week or what happened? >> no. i think those things will impact the market. the sentiment has not been strong this week. that's sort of bad luck in terms of timing. last year we had things like the fiscal cliff, the election, those bigger issues impacting the market. we haven't had that this year so we've seen a lot of pricings go in the middle or above the range and trade extremely well. all these deals this morning are still trading well post pricing. >> my impression is we have the same number as last year but the size is bigger. are we going to see more coming to market with bigger deals if the market holds up? >> i think you're right. we have seaworld tonight. private equity generally does bigger deals. this has been a private equity market. last year was a vc market.
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>> i understand that there was a dress rehearsayal for the penguins last night. they brought penguins down on the floor to walk them in. we have a penguin ringing the opening bell tomorrow. rock stars and opera stars, heads of state but i don't think in the 15 years i've been here, i've never had a penguin ring the bell. >> i think it will be fun tomorrow. it is a great company so we are excited. >> we have some natural gas inventories. carl? what's going on? let's get to sharon epperson, get nat gas inventories crossing a few second ago. >> hey, carl. we are looking at natural gas rallying a bit. at least it is up a bit on this natural gas data. we got the first increase in supply of the season in the natural gas market, up 31 billion cubic feet last week. the increase was 31 billion cubic feet. that's slightly less than what analysts were expecting. they expected an increase between 33 and 37 bcf.
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we are looking at colder temperatures coming in the week ahead in the central part of the country. that's expected to last into the first week of may. that's something that may now become supportive of the market as well. technically we are looking at prices that have broken through a key short term resistance level of $4.25. so we're now having broken through that range and now up in the upper end of the range that we've been trading in. keep in mind with prices now at $4.30, we're up almost 10 cents on the session an again it is this natural gas data that's quite bullish for the market. back to you. >> unbelievable. what a climb that's been, sharon. thanks, sharon epperson. back to bob pisani to pick up right where you left off. >> we're with david ethridge, runs ipos here talking about business here. what's coming down the pike in the next couple of weeks? >> tech had a little bit of a
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slower start this year. we've had a lot of yield oriented stocks around energy, reits and the like. then software was going, marin, another good company that's coming down the road can be tableau. >> master partnerships. they're all yielding 7%. >> i expect more of that along with the building product sector bringing more companies to the market. >> david ethridge, three ipos. we'll track them throughout the whole day. >> thank you. after the break, an exclusive with ebay crow john donah done know . ♪
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shares of ebay falling this morning after reporting strong earnings yesterday after the bell. the outlook for the coming quarter or current quarter a big weaker than some anticipated. here to break down the numbers, the president and ceo of ebay, john donahoe. he joins jon fortt from ebay's campus in san jose. jon fortt, take it away. >> thanks for joining us this morning. you kept your full-year guidance the same. next quarter is a bit lighter than revenues than some expected. but talk about what you're seeing overall.
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mobile continues to pli a really big role nechin ebay's transformation. >> mobile is increasingly the way people are shopping and paying. we'll do over $20 billion of mobile commerce volume this year and over $20 billion of mobile payments volumes. that means people closing a payment transaction on a mobile device, that's actually shopping or paying for something on a mobile device. increasingly consumers are using their mobile device in the offline retail world, in all parts of their lives. even if they don't close the transaction on a mobile device, they're doing a search or checking prices and the mobile device is becoming the central control device of people's lives. so we're orienting a lot of our products and innovation around that area. >> i've bought on ebay from a mobile device. got my "spider-man" halloween costume which the kids love from there.
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>> great. >> paypal's been doing quietly some interesting acquisitions this year. iron pearl. duff research. not areas that people would automatically think of when they think of payments. what kind of growth are you trying to inspire when you look at getting iron pearl with paypal and what sort of different web, mobile web experiences is duff research going to help you build? >> well, we've done 20 or so acquisitions over the last 12 to 24 months and a lot of those have been what i would characterize as talent and capability acquisitions where we see teams of engineers or teams of brilliant product innovators and they may have a technology or a business that we like. so we buy them an we put them into our overall offering. and so as we drive a lot of innovation in mobile, the guys at duff bring a lot, as we drive a lot of innovation in the offline world, the guys at ish pearl bring a lot. we like bringing in these
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entrepreneurial teams and the capabilities they bring to the overall ebay/paypal team. >> i believe david faber is going to jump in. >> hey, john. i would love your sense especially given the good amount of the activity that goes on in the marketplace in international markets -- germany for example, always been important. what are you seeing there particularly in europe and is that coloring at all what some are saying is a bit weaker guidance than anticipated for the current quarter? >> well, david, what we're seeing in europe is europe is a little bit softer than we thought it would be at the beginning of the year. i wouldn't say it is material. but there's a little bit of softness we saw in the uk and throughout continental europe. then in our case because the way currencies work it impacted the cross border business. but the strength in the u.s. has offset the softness in europe. with regards to our guidance, we maintained our annual guidance for the year. in actuality, the quarterly profile of our guidance this
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year is very similar to past years. so we're just focused on delivering against that. >> to go back to some of jon's questioning, john donahoe, the transformation that you have already undertaken at ebay is a significant one. but when it comes to mobile, how far along are we in that transition? >> i'll be honest, david. i think we are in the early stages still. i'm not just talking about at ebay. i'm talking about in consumer behavior. we're in a world where increasingly consumers are shopping from multiple screens, shopping from their smartphone, om a tablet, from a laptop. increasingly it is going to be your tv. we're working with some retailers that are going to put touch screens on their store windows so that people can shop at night when the store is closed. so we see a world where there is going to be multiple screens everywhere and consumers can access the internet, either at home or at the office or in the
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retail environment. so we're orienting everything we're doing at ebay, ebay, inc., to help consumers have a seamless shopping experience. >> john, last question i have, if there's one danger that i see particularly for paypal, it is scrappy competitors coming up, what you talked about last time you and i talked, braintree, et cetera, that have gotten some of the hot mobile retail start-ups under their wing. what's the major ting that ebay has to do to get the next fab, the next uber, for instance, under the paypal wing? >> well, there's going to be a lot of innovation in mobile payments and in this whole space because there's so much change. weened that. we actually respect and like that. we made several acquisitions. but we're innovating aggressively as well. we just launched our new mobile software library at south by southwest and actually companies like uber, companies like fab are using paypal and integrating
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paypal because paypal brings 120 million active consumers. paypal brings a network of capability that is strong. and so there's got to be a lot of innovation. but trust me, paypal's innovating aggressively as well. >> carl quintanilla is back with a question for you. >> john, couple questions from us here back at post 9. a, serious question about the tax structure in this country. does the senate open doors for states to start charging sales tax, what effect does that have on e-commerce. and, when do you start accepting bitcoin? >> i heard the first question but not the second. >> he asked about bitcoin. >> okay. on sales tax, yes, there is a movement afoot in washington to bring sales tax to the internet. here's the issue that we are focused on, which is protecting small businesses from having the small businesses online from having the burden of having to collect sales tax from 9,600 different local tax
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jurisdictions across the united states. and small businesses are the ones that are creating jobs in this country, and a lot of e bail sellers are small businesses that are not -- they're two people, they're four people, they're working out of their garage, they're working out of a small warehouse and the burden of collecting sales tax from 9,600 tax jurisdictions on interstate transactions we think is going to be cumbersome and ultimately hurd them. we don't think it will be material to the overall ebay ecoeco system but we are speaking out on behalf of small business. bitcoin? i think that's one of those disruptive innovations, a little like kazaa or the pre-skype things in the early days. it's interesting. it will play its way out as the different other stake holders, regulatory, legal and others begin to understand it and get their hand around it. and we'll see. it's another classic case of radically disruptive innovative idea in its very, very early
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stages. >> we've got time for one more. going to bring it back to mobile. what is one surprising thing that you think is going to drive the trajectory of mobile this year that a lot of folks might not be thinking about? >> here's what we see. it gets back to what i was saying earlier. consumers using multiple screens. >> the ones who shop with ebay spend twice as much -- >> our ebay data. 22% of our buyers are using multiple screens in a transaction. that's a smartphone and tablet, or smartphone and laptop, or laptop and then smartphone. those that are are buying twice as much. so it just means that consumers that are using mobile devices are more engaged. if you extend mobile out to tvs, your car if you have a tessa, store fronts, we're talking to retailers about putting touch screens inside their stores. it is creating a more engaging world for consumers and the
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think is the result will be they'll be more engaged in how they shop and pay. that's a good thing for consumers and ultimately for retailers. i think we're in the very early days but the data we have in our $20 billion of mobile commerce volume, some of the insights we're see something people who are engaging in that way are more engaged. touching is a more engaging experience. so i think it's going to be a very exciting period for commerce and payments and we're excited about the future. >> i know you got a shareholder meeting to get to. those folks are hoping you hold on to more of those dollars in that multi-screen world. thanks for taking the time to deal with us exclusively here, john. >> ebay there, and jon fortt. >> you might have thought that would be a business opportunity, collecting tax in 96 different tax jurisdictions through the portal of ebay. click, your tax is paid. i don't know. still ahead, the building of
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the biggest container ships to roam the world. and the man who's paying $190 million for each of them. the maersk ceo nils andersen will join us here live at post 9. what will twitter music mean for the likes of pandora? back in two. but i wondered what a customer thought? describe the first time you met. you brought the flex in... as soon as i met fiona and i was describing the problem we were having with our rear brakes, she immediately triaged the situation, knew exactly what was wrong with it, the car was diagnosed properly, it was fixed correctly i have confidence knowing that if i take to ford it's going to be done correctly with the right parts and the right people. get a free brake inspection and brake pads installed for just 49.95 after rebates when you use the ford service credit card. did you tell him to say all of that? no,
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the street." i'm julia boorstin in los angeles. twitter wants to help you discover new music by tapping into all the activity and conversations on its service. it is launching a new stand-alone app called twitter music today. the app has a couple of different features. you can track the most popular music on twitter. can you follow your favorite artists and friends to see what they're listening to and which artists they follow, and can you tweet out the songs you like without leaving the app. twitter is partnering with apple's itunes to allow people to click to listen to song previews or click through to the itunes store to buy a full song. which should drive traffic to
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itunes. in addition to apple, twitter music is also integrated with subscription services spotify and rdio. right now there are no ads and twitter wouldn't comment on whether it is sharing revenue with itunes download or spotify driven by twitter music by but twit her could eventually include ads or do revenue share down the line. twitter is in talks to partner with more music services, perhaps like pandora. we'll have to see. it eventually works with the likes of pandora or becomes more of a competitor. the apps's really cool. it looks great. it seems pretty easy to use so far. it is too soon to say whether the recommendations are really good because you don't tweet that much about music but we are having fun playing with it. >> julia, that's really interesting. can i ask you a broader question
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about these music services. i know a lawyer who's negotiating many of these deals, spotify, pandora, whatever it may be. he tells me that the scandal in all this is that the artists are not going to get any the scanda artists will not get any cash back from the new innovations because the record companies have taken such large up fronts nothing will every trickle back to the artist that they represent. have you heard about that at all. >> well, one thing is for sure is the more people purchase music as opposed to pirating it, that's better for art is. artists generally get paid per download. if you hit a certain number of downloads, they share the music. twitter is helping people discover music and links them ways to buy it through itunes or get paid through spotify. i think artists are getting frustrated. some are distributing the music
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themselves. but twitter should help people buy more music legally. and one thing i hear is the biggest competition for the traditional music industry is piracy. and that's what they really have to battle. certainly it's going to feed speculation about twitter's own business model, their cash flow, their profitability, which they tend to not talk a lot about. thanks so much, julia boorstin in los angeles today. apple is below 400 again. tonight a slew of tech earnings on top from microsoft to google. mark will join us live for his take on what we can expect tonight. back in a minute. with the spark miles card from capital one,
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we know what kind of roller coaster it's been all week for the markets. we were down 80 or so. managed to claw our way back. the dow just 12 points from breaking even. the nasdaq is trying to rebound as well. we'll see if this can last. for more on what's moving let's go to josh lipton for a market flash. nice spike here. gnat gas inventories well below expectations. umg up 24% this year. up 62% over the past 12 months.
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the stocks are also turning higher on that headline. carl, back to you. >> thanks so much, josh lip on the. 20 new container ships are being built for the world. the likes of which we have never seen before. it will be four times as long and will loom almost as high above the water as the torch of the statue of liberty does above new york harbor. each ship is costing $190 billion to build. and the man who is writing the checks for ten of them is nileser son. he trrang the opening bell at t the nasdaq this morning. these things are big. my word. they can fit in the panama canal? >> they're designed for asia ya and europe. and they are the most fuel efficient ships on the trade by quite a margin and reducing co2 emissions.
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so it's a good investment. >> they carry 18,000. >> wow. that's extraordinary. >> it's huge. >> and 20 of them is quite a bit a fusion of capacity in the trade. we, of course, put them in for a long period and take out a number of categories. take them in to others so we're not incapacitated. >> the burning question for many people at home will be do we need the distribution around the world in a moment? at march we were worried about fed-ex. that is in a clear down trend since 2008. i mean, is the world ready for this? >> i mean, this is not optimal time to put in capacity. so that's why we're putting in the capacity and we're taking the smaller ships out so we are not at capacity.
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but trade is very big from asia ya to europe. we are talking about maybe slower growth. but this is a growth business in general. >> i wonder if the economies in scale are in effect so large that they've become lethal to the competition. by doing this, can you undercut everybody's rates? is that the bet that you're make sng. >> we have to be realistic. these investmenteds are a very small part of the global fleet. they not going to change the price picture. we don't put them in to reduce rates. we put them in to make more money and also reduce co2. so when we designed them they were part of the co2 emission production problem. >> a lot of viewers maybe be looking for you for guidance on global trade in particular. is there one that tells you what
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happens the most about global trade? >>. >> i think there are some interesting trends. we saw significant growth in trade from europe to asia ya. reflecting the fact that the european economy is becoming part of the area. becoming more competitive as costs go down. and you see the chinese government steering away from being export and investment led economy to being import and local domestic con sujs asumptc >> do these big ships leave china full and then go become almost empty? >> they go back with significantly less trade, as we say. so they go back. it's underutilized for sure. and that means there's a lot of
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opportunity for good rates to the exports to europe. >> before we have to let you go, there are two main businesses. the shipping and also oil and gas and you're doubling down on those. you sold $18 billion of assets to beef up your presence in both of those. what do you think the price of oil where it is at the moment. do you have to start canceling investment projects? >> no. we have a very well diversified portfolio of relatively low cost production areas. so we have a good mix of investment opportunities. and i think anybody making a bet saying the oil price will be this absolute amount for a long period is making a big bet. we think we have to be prepared for higher order price.
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but also for temporary negative impacts. >> but in a word, it's going higher from here? >> we don't have the full price. but any company is well advised to be ready to take advantage of potentially higher oil price and of course, protecting itself against a temporary downturn in the market. >> a group ceo from denmark. >> if you're just joining us this morning here is what you missed. welcome to hour three of "squawk on the street." here's what you are missing so far. >> we got off to a strong start of the year. we obviously feel good about that. revenue growth of 4%. i think it's important not to get carried away. the more we go around the trend the more it looks like the trend is 2%.
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>> verizon. amazing numbers. 5 h all domestic shows you what i'm hearing. because they're international. we are the place that is doing well versus everybody else. >> i am still not getting a wow factor. they have to have the skunk works. if they come out and say listen, we have apps, a lot of people think it will be turned by financial engineering. i think it has to be turned by engineering. >> las vegas is firmly rebounding now. and we are leading the way. i would expect las vegas as a hospitality market will outperform the other u.s. gaming markets over the next couple of years. >> consumers can access the internet at home, in the office, or in the retail environment. and so we're orient everything we're doing at ebay to help consumers have a seamless
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shopping experience. >> good thursday morning. welcome to "squawk on the street." you're looking at a live shot of the cathedral of the holy cross in boston. where the president is attending an interfaith service. in attendance the boston mayor. deval patrick. mitt romney is there. the president will speak toward the end of the service. we will update you when, in fact, that happens. an interesting day shaping up on the markets. we were down quite a bit. close enough. we managed to claw a little bit back. the dow is down 22 points. s&p down about two-thirds points and nasdaq down 11. strong growth. positive guidance for q1. and a programming note. pepsico ceo indra nooyi will be
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here. and apple is falling below $400 a share, hitting the lowest level in almost a year and a half after bmo cut price targets on the stock ahead of the second quarter report, which is of course next week. we will help you navigate this roller coaster ride with a man who manages $400 billion. david kelly of jpmorgan will join us live. plus, big day in tech. google to ebay to apple. we'll cover it all. see if the situation at apple is worse than it seems. richmond fed president saying if he were a dictator he would end qe next. a dispointing shower. let's bring in david kelly.
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david, good to have you. good morning to you. >> glad to be here. >> let's start with the micro stuff. earning seasons. you say it's off to not a bad start, right? >> that's right. as we add up the numbers, it looks like eps will be up about 5%. maybe a little bit more. the s&p 500. that will put us at an all time high for operating earnings. it's mostly coming from margins, not from sales. it's a tough environment. this is an economy that allow earnings to continue to grow. >> we knew margins were going to be a challenge getting into the year. do any of the warnings, any of the rust bell guidance that has come down give you any concern about capex which has been one of the bull's big arguments? >> not too much. when i look at the guidance, the guidance is negative relative to
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recent history. but when it comes to margins, we think we'll see 3% productivity growth in the first quarter. that is not bad. this is an economy in which we vice president seen much productivity growth to this point. i think it's picking up a little bit here. i think that will ret up a little bit. we're not looking for explosive earnings growth. we'll go to a 5% pace over the next year or two. and the next big economic bump. and that should be good enough for the oil prices. >> it wasn't too long ago that people were putting three handles on. we had strategists putting aggressive targets on year s&p. does any of the data lately think this is not a 33% quarter and certainly not a 1,675 year. >> i think it could be a 33% quarter still this year. some of the numbers i have seen
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on capital spending look quite good. my models tell me maybe 1.5% in the second quarter. but remember, we have this huge fiscal drag right now. we are doing major work on the deficit this year. that is slowing the economy. later on the economy can accelerate. overall, it wasn't as bad as it looked in the fourth quarter. it wasn't as good as 3% to 4% if r the first quarter. i think it's good enough. >> wow. a lot of people would take that. you ian say -- i mean, talk about a silver linings playbook that the collapse in goal removes an impediment to hardball asset pricing. with you explain that? >> we have seen a lot of markets are very out of whack in recent years. that causes people to make strange investment decisions. also to cash accounts. still too much money sitting in cash accounts. but it doesn't tell me anything
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important by the global economy. it just tells me that one side show was that distraction for a lot of investors is ending here. so it's funneling money back in towards long-term inmentes in real estate, in business, in equities. that's where we want to see money invested. >> does that mean you take a gamble on the technology? we'll get results tonight or is this a general bulls market? is that the safest way to play it? >> no, i don't think you take a gamble. i think other the next few years the growth stops. technology stops. it will probably outperform the most defensive names. a lot of money is going into defensive names. as interest rays go up, as confidence returns, money will move from that part of the market towards more agretsive aims. but if you go for that long-term
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perspective, then it's worst being over the growth areas of the markets. >> david, always good to talk with you. thank you so much for the time. we'll talk to you soon. >> thank you. >> teches are lower today after reports from microsoft, ibm and google. google expected to hit 14.2 billion. mark mahaney rates google ads an outperform. he joins us from san francisco this morning. good to have you back. >> good to be here, carl. >> we'll get a lot of information of the names we mentioned. what is the most important? >> the igest issue is the concern that mobile internet usage, which is the mundmental biggest trend is the stocks traded up as cpcs improve. if they improve this quarter, the stocks should trade up. that's the key number. >> we were looking at a slew of
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price target increases a few weeks ago. in the 900s. a lot of people began to say there's the sports illustrated cover. >> we have a 9 bt$.50 price target. we're using 18 times the earnings. we think this is a sustainable earnings grower. that multiple is in line. you need a few things to happen for google to get up here. continued strength off youtube. you want to see continued 20% top line growth. that's a big market for consumer internet names. that could limit the upterm sides, too. >> let's pivot to ebay. we asked him to drill down on europe. he used the same phrasing, that it is a little bit softer. but he did add that it was not material.
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>> no, i don't think. so. it istarial. amazon, price line, google. europe is 30, 35% of revenue. if the consumer starts to roll off again it's going to cause headwinds for the name. it is material. >> we've spent time with their numbers looking at the share declines. the decline in display ad revenue. people want to give marissa meyer more time. how patient are you? >> well, i think you have to give an internet turn around like that a year and a half, two years. those had assets not as deteriorates as yahoo! is. and i think he's been very cautious about the length of the turnaround.
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>> i mean, it's hard to talk about yahoo! when so much is based on the multiple that you put on alibaba and japan. it's like two-thirds of their market, right? >> yeah, and back up just a little bit. what you do know is the core business is trading at two to three times cash flow. we interpret that as the market doesn't believe in the turnaround, which makes the shares a bit of a safe, small biz for us, though. >> so of all the the biggiies. googles, yahoos, a.mazons, who o you gravitate to first? >> you look at the company with the most strategic options out there. it's hard not do be on amazon. given retail, marketplace business, the cloud infrastructure business. and then all four of those areas
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seem to have strong market share positions. that is a little bit more attractive. the more you gravitate to google as your top pick. >> people are now talking about their studio, which i guess their show is going to be called alpha house with john goodman about senator who is live in ha house together. >> no, i'm not sure i watch that. this is an odd investment. the market should be fully cognizant of this. the video content investment -- i have covered amazon for years. i'm critical or skeptical of it. >> mark, you cover the world, as they like to say. apple hurting, falling below
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400. again at 394 today. could things be even worse? we'll be back after a quick break. it's as simple as this. at bny mellon, our business is investments. managing them, moving them, making them work. we oversee 20% of the world's financial assets.
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crude oil is up a tap today. take a look at the energy sector. slightly positive after falling more than 5% over the last week.
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one particular energy stock helping the sector, josh lipton has it at hq. >> check out the energy sector. the best performer is peabody energy surging higher. they reported a smaller than expected quarterly loss. targets unchanged. some analysts suggest no bad news is good news. btu is down some 21%, but marching high here this morning. guys, back to you. >> thanks so much, josh lipton. apple is back below 400 today. the lowest level since december of 2001. but could things be even worse? good to have you. >> good to see you. >> i was looking at the pes for the biggest companies in the u.s. stock exchanges. and the market really seemed to have gotten it right when it kept assigning a low pe to apple. even as the share price was
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marching up. it's interesting. of the top 50 largest companies on the u.s. exchanges, only one other company has a low er. citigroup, bank of america, glasco and disney. so the market is telling us there is a high beta opportunity and high beta risk for apple. we have a well known analyst on earlier in the program. a slew of responses on twitter said what do you mean ignored? 40%. i wonder if you think the street is done revising their expectations. >> let's take a step back before we take a step forward. if revenue growth from 2010 to 2011 was incredible.
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apple is going to going to hit the wall of large numbers. if you look at revenue growth for 2013, 2014, you're at a 13, 14% revenue growth number. is it possible based on the suppliers? the news we see from china for the revenue numbers to get hit. i would say yes. zbr. >> it sort of provides a nice headway into twitter. what do you think the story is here? >> i know you're a big music fan, carl. i encourage you to go check it out. you're a big twitter fan, too. it's kind of basic. but i tell you, i think there's
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something there about the power of millions of people sharing and discussing music this way. you'll be able to blow up the old notion of radio, in which one signal is beamed to all of us. in essence you can find music, listen to it with your friends at the same time, and share that with people you know or don't know. i think the power of the service is just the scale of twitter. and they really have nothing to lose. i give it a positive first review on that alone. >> i think a lot of people may not realize the ties between apple and twitter. twitter cfo is the former cfo of pixar, which was a steve jobs. he had a real affinity for the product and thought they were going to go places before he died. if you're on the vanguard of discovering and listening to music, itunes is on a venue for buying it.
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at this point, the services have surpassed itunes. >> we will see when they post numbers next week, dennis. gooed to talk with you. >> i'm going to see you on twitter music. >> dennis berman. straight ahead, we'll go live to boston to get the latest on the investigation into the marathon bombings. a lot more "squawk on the street" in just a moment. farmers presents: fifteen seconds of smart.
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want to take you to boston this morning. they say they are focusing on finding two men seen on camera just before the bombs went off. this as they attend an inner faith service in honor of the victims. good morning, scott. >> good morning, the title is healing our city. still to speak is governor deval
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patrick as well as president obama who will speak at the end of the service and will bring those remarks to you live. as you know in any sort of in terms of healing it, the key is willing a will to heal. that is very much apparent here in boston. now onto the investigation, as carl said two individuals being sought by authorities on camera, videos can be waptured of these individuals around the time of the bombing, but authorities are also saying that the pictures of those individuals have not been released. so pictures are not the men that authorities are looking for. but there were multiple images that captured the explosion and the time leading up to it. that's what authorities are looking at frame by frame by frame. not just cell phone video, but
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surveillance video. we talked about the lord & taylor camera directly across the street from the second bombing. there were two other cameras at least that were supplied by a company called access communications. those cameras were high definition cameras. so these could be very high quality images, and we expect that authorities may at some point release a picture, as they often do, to try to get public support. we are also still awaiting a news conference that never did happen yesterday. sho the last news conference was on tuesday. we expect it perhaps after this memorial service is over. we'll start hearing more from the authorities about the investigation and about the two men they are looking for. scott, thank you for that.
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another update this morning. this is a live picture from the texas fertilizer blast plant that happened last night. the atf has deployed an elite response team. it killed 16 people and have left 160 injured. toxic fumes forced the evacuation of half of a community. that explosion could be heard up to 45 miles away. it levelled buildings and blocks in all directions. here's what one witness had to say. >> i thought it killed both of us. i know it went quick, but it seemed like it lasted forever. it was like one big hit and three or four more kept coming through the truck. there was debris flying everywhere. got a few moments left until europe's trading day comes to a close. we'll get the details here. in t.
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well, it's been up and down for the markets in the u.s., but europe has a mean streak. >> four clear days of losses. today werted with many of the indices in positive territory. but we erased that going through. i'm not sure. can we just take a look at the map of europe as we head into the close there and let me show
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you where we're trading at the moment. and we'll see, yes, some are green, but others have dipped into negative territory, so four straight days of losses and again, further losses as you can see at the moment. the economy still very much front and center. >> the european markets are closing now. >> now the effect of what was happening during the course of the week is some of the major indices in europe have dipped into negative territory. let me show you where we are on germany and france. the dow is still up 11% this year. that has actually put them down to negative territory. the uk is still positive. most g-20 countries are negative for the year so far in the equity markets. the u.k. and the u.s. is one of the very few standouts. notingly some of the banks.
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i can't tell you exactly why. there was rumor about interest rates cuts. but we're down on those banks, as you can see. the other thing to watch out for is the fallout from that very troubled italian bank. they alleged some sort of fraud, possibly involving derivatives. well, we have a report from ruth ers that says now they were in the offices of jpmorgan looking at documents for the past. i can't tell you more than that. the other big news will be the fall on nokia. the loss wasn't assed by as many people expected. the sales were down 20%. what i think is fascinating if you look at this chart is the five-year chart of nokia and
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blackberry are almost exactly the same. >> wow. that's creepy. look at that. interesting. let's get a look at commodities. not gas is making history today, too. >> that's right. look what happened to gnat gas since we talked to you an hour ago. it appears they are trying to target the $4.50 level. a lot of traders are looking at that for the next key level as we look at prices up 20 bank account right now after that story from the energy department. it showed an increase in natural gas levels. but the fact remains we're looking at now a deficit for the five-year average for natural gas storage levels. it's not the oversupply issue. now we may be getting to more normal levels. that is what traders are talking
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about. keep in mind as well as we look at the oil prices that we have seen this week x we're continuing to look at whether or not the strength that we saw earlier in the session will hold. in terms of gasoline, that is seeing weakness as well. there have been a number of refinery issues with power outages. and now as we're hearing, the refinery has restored operations. they are in the process of doing the same and should be back to normal by the weekend. that is one reason why we're seeing the weakness in the gasoline market. and we have to keep our eye on dr. copper. copper prices have been extremely under pressure at one and a half year lows. they are trying to stabilize in the event that there's been so much weakness there. but we continue to watch copper prices. it's closer to a bottom than oil. back to you. >> that's one of the big calls
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recently on commodity calls. thanks, sharon. sharon talks about things getting more back to normal today. feels more normal. >> yeah, and the important thing is we want it more back to normal. it's a lot quieter today. the volume has dropped. we had two days, monday and wednesday with 90% of the volume to the downside. we're in an up market, supposedly, when you get two days, 90% of the volume on the downside. that gets the technician saying, no, maybe we're not in an up market. maybe we're in a down market now. that gets people talking. you don't want the trend followers to say, uh-oh, we're not in an up trend. so you want calm days like this to see what the markets are doing. so here, we have energy materials. when were they hit the most they're to the upside today. the actually, financials still not recovering from bank of america's disappointment yesterday. a lot of damage has been done
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this week. you want to this look at small caps. down almost 4% for the week. this is industrials, down 4%. the dow is down not as much. so this is a lot of damage to accumulate. that's dak also on the downside by 3%. all these things have been destroyed this week. we saw 7%, 8%, 10% declines. there's precious metals. i'm sorry. that's mining stocks. precious metals here. this is coal stocks. kol is the symbol. stheez are all funds and steel stocks. all of them to the upsideday. one thing that's interesting is what's happening with the medicare advantage programs. i was surprised. they were surprisingly downbeat.
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there has been final rules publiced about what the rates they could public are looking like. united health care was downbeat about it. they say the costs higher than they thought. the rates are lower. they're going to cut benefits and they may talk about exiting markets as well. so i thought the final rules that were public were very beneficial. of course, they're leading the medicare advantage providers to the downside today. they're hurting the dow. >> they had a good day not long ago. thank you, bob. richmond fed president speaking out today in a first on cnbc interview saying if it was up to him he would stop asset purchases now. food morning, steve. >> good morning, carl. as you know last year he
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dissented. he made clear in the conversation earlier this morning from the credit marks imposing. if he had to vote he would vote against it. that to me is the largest cost of what they're doing now. >> i think what is interesting is his conversations and feelings about cost has become talked about by other more middle of the road. so he's had success in getting his opinion out there. a gradual decline. the unemployment rate could be in the low 70s. and he's been surprised at the low levels of inflation. >> i was afraid the public commentary would transfer. so i think we're in a good place now. we shobt be complaisant.
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i think that the turn where you stop supplying more ease and stop withdrawing monetary stimulus. that's always the time where it gets tricky. >> so he's going to remain vigilant. a lot of supervision going on. and lacquer has been talking a lot about ending too big to fail. he says the key to ending it is these living wills in the dodd frank legislation. >> and the plans have to be credible. just one more thing about what lacker said. obviously his opinion is not one in the consensus right now. but listen to what he says and what others are saying, it's clear his concern about cost is something that is increasingly mentioned by other members of
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the fed. an whether or not the fed is going to go on and do infinity, that discussion of cost is what's going to stay in their hand. carl? >> zbr and one quick question. after his comments from last week, i think it was, i wonder if you think lacker is moving the middle at all. >> i think jeff has been miskashlgtized. he's been supportive of things the federal reserve has done. his big concern about the cost. i don't see him moving to the middle. he's had a measured opposition. not a radical opposition to what the fed has done. he's a smart economist who a lot of people like to listen to and hear his thinking on things. they just disagree with his overall conclusion on policy. but obviously they're listening to him. we're talking to everybody. and it's the consensus that we're interested in. and i see that the consensus is probably towards a qe tapering maybe some time in the fall toward the end of the year. that's where it is right now. >> always good, steve. it seems like you have covered
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all the bases over the past few weeks. we'll talk to you soon. apple options are on the move. josh lipton has that for us at hq. >> we're looking at apple down 2%. staying in the red. be e low 400. i spoke to mark sebastian saying volume is heavy. trading at close to the $10. trading request move close either way between now and tomorrow night. so the pgss traders betting this thing stays very volatile. carl, back to you. >> thanks going to be important to watch, josh. thanks so much. it's a big day for earnings from tech to the consumer. earnings squad is ready to break it down for you. and later on, the public company agains tomorrow. we're live at a park in san diego with a look at whether it will be a whale of a deal. revolutionizing an industry can be a tough act to follow,
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welcome to the earnings spot. we are helping you on tirs you may have missed. today we are joined by cnbc contributor. let's get to the score card with 16% of companies reporting so far. 72% beat their targets.
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6% met us. a number of big earnings out this morning. united health is dragging down the earnings after it could be up to a $300 million burden this year. pepsi trading at an all-time high and nokia shares, wow what a plunge as the company continues to be hammered in the smart phone market. mobile sales fell more than 30%. as for the stories we are digging into, let's start off with tech. we have a bright spot this morning growing demand for global price makers. they feed into the mobile devices as well as the tablet markets. and there are a lot of expectations. the street came out. and so they were lowered expectations. so today we're seeing a nice pop on the stock. can we read through the other
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chip makers. >> you might be able to. i would attempt to do that. just like we were talking about fast on five last night. when you see a downgraded stock. when they have more expectations, those are the ones you tend to get decent pops from into earnings. and a lot of big institutions were betting on that. they were buying the may 17 and a half calls. and they were right. so if apple were to break down just like dan nathan said i would love to jump on that. >> the first thing is, is it sustainable? is it one of those things where it drifts back low sner. >> are the gains in tablets in devices sustainable? taiwan over the past three years has gotten half of the revenues, more than half over the the three-year period from the tablet market alone. anybody not own a tablet anymore? how many more are you going to
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buy? therefore how many more chaps can be sold. the other thing is intel and samsung are going harder into the boundary space. >> and it's the new chips that intel is coming out with. the ones of lower power consumption. that is key for intel to break into that and take market share away. >> right. let's get to is this. we are seeing that stock decline despite the earnings. it's all about expectations, because they were high expectations going in. >> and last night it broke down pretty hard. it makes a real nice move, gets all the way back into the green during the show, and this morning it takes it all the way back down to last night's lows. they are trying to fight off the
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lows here. i like what sandisk is doing. >> wuchb of the takeaways from the company's outlook is they expect -- i love this. >> it's a technical term. but that's telling you again that's a warning. be careful. with the final state drives, i should point out. let's get to a couple of stocks here. this really feeds into the home building and notion of recovering the housing market. >> you have sherwin williams. the company is doing well. i was surprised to see the stock's performance. you are seeing a flattening. this is a huge momentum stock. take a look at revenue groult. up 1% and some change. you're seeing a slowdown there.
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i just point out there is a slowdown in growth. and then we take a look at select comfort mattresses. >> >> before we think mattresses are out of play, mattress firm was saying be careful because they are in placement, not housing. something doesn't add up in the comfort story for me. back in the fourth quarter when the company missed, they said basically their customers were telling them it was the fiscal cliff. now you get into media buying has been the issue going forwar forward. >> media buying meaning advertising spent? >> yeah. an analyst asked is there competitive issue. the comp s no, we don't think it's competitive. to me something is not quite
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right. >> oh, are we seeing any sort of bets being made higher or lower on any of these stocks? >> i think the input story will play out favorably for the companies. inputs going forward. and energy down is well. that's good for sherwin williams, too. maybe not as much for select comfort. but sherwin williams with crude oil prices coming down. i want to generally watch growth continuing. and i know you can get it from input costs. that's just part of the equation. and it's a quarterly part of the equation. if they've already hedge ed the they don't get the benefit of that. depending on how far out the hedges were. >> if you want to join the conversation, please tweet us. we'll be back with more during street signs and john joins the gang on halftime report in just a few moments.
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meantime, penguins, sea lions and shamuu, oh my. seaworld goes public tomorrow and we are trying to see if the ipl will make a splash. that story on "squawk on the street" right after this.splash. that story on "squawk on the street" right after this. and without a line. now that's a fast car. it's just another way you'll be traveling at the speed of hertz. but i wondered what a customer thought? describe the first time you met. you brought the flex in... as soon as i met fiona and i was describing the problem we were having with our rear brakes, she immediately triaged the situation, knew exactly what was wrong with it, the car was diagnosed properly, it was fixed correctly i have confidence knowing that if i take to ford it's going to be done correctly with the right parts and the right people. get a free brake inspection and brake pads installed for just 49.95 after rebates when you use the ford service credit card. did you tell him to say all of that? no, he's right though...
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coming up on "the halftime report," google, ibm, microsoft all set to report after the bell. we'll give you the setup ahead of those numbers. we are talking strategy here to give you the playbook for
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navigating the big swings in the market this week. and one hot chipotle debate. two traders take off the gloves and you decide which makes the better case for the restaurant stock. carl, back to you. michelle, thanks. you may have heard us mention the penguins are expected to be here at the new york stock exchange tomorrow. that's because sea world will be making its public debut. jane wells is the only person we would ever put on that story. and she joins us from san diego. hi, jane. >> reporter: hey, carl. the number of shares will be larger than previously expected according to blackstone and its partners. they will now issue as many as 16 million shares up from 10 million. sea world started in san diego and has 11 parks including busch gardens and aquatica. and they are hoping tomorrow will make quite a splash. now is from 26 million to as much as 29.9 million shares that could price after the closing bell between $24 and $27. the company hopes to use
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proceeds to pay down debt and pay back a fee to blackstone. blackstone private equity will still hold 60% of shares after the common ipo, but at the midpoint of the expected share price, sea world will still be something like 27 times trailing earnings. that's much higher than pierce, but as we take a deep dive into the statistics, sea world went from losses to profits under blackstone from 7% last year. profits quadrupled to over $77 million. and the company is more aggressively marketing internationally. >> sea world is one of the major attractions for those international travelers. and, again, representative of that fact that when governor brown, most recently went to china, part of his entourage was the marketing vice president of sea world. >> reporter: as for risks, quote, we are highly leveraged. and perhaps unique to this company, the company cites potential risks to its animals, how they are treated, regulations, disease, and the risk to employees and guests.
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you may recall three years ago a sea world employee in orlando was killed by a killer whale. the company was cited by osha and sea world. they are appealing the violations. finally, for the industry as a whole, goldman recently issued a report on cedar fair and six flags, quote, amusement parks are a standout when compared to our hospitality coverage. of course, goldman just happens to be a major underwriter of the ipo to raise over $800 million. back to you. >> it will be fascinating to see how it is received tomorrow. jane, great stuff. appreciate it, jane wells, from san diego at sea word. when we come back, the hottest start-ups in the vc world. why snap chat is making a big headline when "squawk on the street" returns. it's as simple as this.
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be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office.
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they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: scottrade- proud to be ranked "best overall client experience." i wanted to bring you an update on one of the recent breakthroughs. snapchat ceo evan siegal announcing that 150 million pictures a day flow through the app up from 60 million in just february. evan joined us for his first and only interview back in february and commented on the company's growth. >> we really think this is a big idea. it's just the very, very
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beginning of something we call media that you share that disappears. so it's hard to say right now, but it's really a big space that we look forward to exploring. >> an update on the story we brought you last week when we previewed warby parker's store that opened last saturday. they tell cnbc that more than 4,000 people came through the store just over the weekend. a line outside spanned half a block and some customers waited one to two hours just to get inside the store. something to keep an eye on. take a look at the markets here, the dow is down 57 points off the lows, but also off of the highs. we keep a close watch on apple today, which is down below $400 a share. once again, as the debate continues as to what they're going to have when they release earnings coming up next week, e-bay continues to suffer after these comments last night from ceo john donahue that europe is acting softer. we had him on our show a few moments ago and said that wasn't te